Feeble demand and restructuring pangs drag Q2 export sales: DBS

Exporters are in for a double whammy.

There are unpleasant months ahead for non-oil domestic exports (NODX), as exporters are bearing the brunt of domestic labor restructuring and demand continues to be feeble in key international markets.

A report released today by DBS stated that May domestic export sales are pegged at -0.7% YoY,
a further erosion from the already modest 0.9% expansion previously experienced by the sector.

According to DBS, “It has been tough for exporters for the past years and it doesn’t look like it’s getting any better. Labour crunch remains a concern while rapid cost escalation is diluting exporters’ ability to compete effectively in the international arena. Hope is for productivity to pick up but that will take some time.”

Here’s more from the report: 

Expect a slight downside surprise in May 14 NODX due tomorrow morning. This will be a tough call as recent export sales data and the PMIs were running sideways.

Indeed, market is sitting on the fence, undecided about the outcome, with consensus putting up a forecast of 0.0% YoY. It’ll be interesting but we reckon that a slight downside surprise may be on the cards.

To a broader extent, this reflects a sideway move in export performance. Demand from Asia continued to be met by sluggish growth from the West.

While there have been promises of pick-ups in external demand, on the recovery in the developed economies, things have fizzled out into nothing more than a mirage when reality set in in the first quarter.